Bloomberg:
- Cyprus Capital Controls First in EU Could Last Years. Cyprus is on the verge of an unprecedented financial experiment: imposing controls on money transfers in an economy that doesn’t have its own currency. Countries from Argentina to Iceland have used similar measures in the past to defend against devaluation. Being part of the euro zone may make it harder for the Mediterranean island to enforce restrictions, as any money that leaves the banking system can be taken out of Cyprus without losing value. That also may make it more difficult to meet the goal set yesterday by Finance Minister Michael Sarris to lift any controls in “a matter of weeks.”
- Europe’s Deep Freeze Takes the Wind Out of Store Sales. As most Europeans shiver in the grip of the coldest March in living memory, the region’s retailers are feeling every bit as uncomfortable. Spring fashions, potted plants and garden furniture -- which normally contribute to sales at this time of year -- are gathering dust as freezing winter temperatures show no sign of dissipating. Kingfisher Plc, (KGF) the region’s largest home-improvement retailer, has had a slow start this spring, the company said yesterday. Hennes & Mauritz AB, (HMB) Europe’s second-biggest clothing retailer, reported last week that cold weather was among the reasons for a 10 percent drop in first-quarter profit.
- U.K. Clean Energy Rules to Add 36% to Company Power Bills. U.K. measures to curb carbon emissions may raise power and gas bills for the biggest corporate consumers by as much as 36 percent by 2020, the Department of Energy and Climate Change said.
- Deutsche Bank(DB) May Have Rating Cut by S&P as Legal Costs Rise. Deutsche Bank AG (DBK), Germany’s biggest bank, may have its credit rating cut by Standard & Poor’s after the lender reduced its reported profit for 2012 amid rising legal costs. Deutsche Bank’s A+ long-term rating was placed on CreditWatch negative, S&P said today in a statement. The Frankfurt-based firm said last week it had set aside additional money to cover costs linked to U.S. mortgage lawsuits and other regulatory probes, lowering 2012 profit by about 400 million euros ($514 million) to 291 million euros.
- China Shadow Banking Hard to Squelch in City Plagued by Suicides. Zhou Xiang is playing with his mobile phone in a room just big enough for a desk and chairs at the year-old Wenzhou Private Lending Registration Center. Not a single prospective customer has shown up for hours. As a government-sanctioned loan broker seeking to match cash-strapped business owners with private investors, Zhou is one of the few people who can even be found inside the two-story building in a high-end residential district of Wenzhou, a city of 9 million people in China’s southeastern Zhejiang province. Rows of airport-like seats are empty. “Only those who are really out of options would come here for loans,” says Zhou, a manager at Sudaibang, one of five independent brokers operating out of the center. “Most of the time, you would find these firms so weak financially that they can be literally crushed by a straw. The volume of lending is so low that we ourselves won’t be here long without expanding into some other businesses.” One year after China’s leaders picked Wenzhou to start a pilot program designed to curb and regulate the city’s informal shadow-lending networks, it’s clear, based on a recent trip to the country’s epicenter of private lending, that the plan isn’t working.
- N. Korea Calls Combat Alert as U.S. Spurns ‘Bellicose Rhetoric’. U.S. officials denounced North Korea’s threats after Kim Jong Un’s regime put artillery forces on their highest combat alert and warned again it may attack South Korea and America. “North Korea’s bellicose rhetoric and the threats that they engage in follow a pattern designed to raise tensions and intimidate others,” White House press secretary Jay Carney said yesterday in Washington. It’s the highest-level combat posture North Korea has issued, Defense Ministry spokesman Kim Min Seok said in Seoul. The South Korean military put a border region on its highest alert level early this morning and then retracted the order hours later, Yonhap reported.
- Rio(RIO) CDS rises most as Rinehart joins iron glut. Rio Tinto Group’s bond risk is rising the most in Australia on concern iron ore prices will decline as supply climbs from new mines including billionaire Gina Rinehart’s Roy Hill project. The cost to insure Rio bonds against non-payment rose 26 basis points this year to 111 yesterday, the biggest jump among contracts in Australia’s benchmark index, CMA prices show. The average for 46 metals and mining companies worldwide fell to 226 basis points from 232. Yields on Rio’s US$1 billion (RM3 billion) of 2022 securities rose to the highest since November relative to similar-dated U.S. Treasuries.
- Corn Supply Slumps Most Since ’75 on Ethanol Profit: Commodities. Corn supplies in the U.S., the biggest grower, are shrinking at the fastest pace in almost four decades as improving demand from ethanol refiners drains reserves already diminished by drought. Stockpiles probably fell 38 percent in three months to 4.995 billion bushels (126.9 million metric tons) by March 1, the biggest drop since 1975, according to the average of 31 analyst estimates compiled by Bloomberg. AgResource Co. in Chicago and Northstar Commodity Investments Inc. in Minneapolis expect prices to jump 13 percent to $8.25 a bushel before supply rebounds with a record harvest in September.
- BlackRock(BLK) Cuts Spain, Italy Sovereign-Bond Holdings. BlackRock Inc.,the world's largest money manager, has cut holdings of Italy and Spain government bonds over the past three months. The firm may shed more if the euro-zone's growth outlook deteriorates. "We have been less enthusiastic about euro-zone sovereign debt compared to three to six months ago," said Rick Rieder, chief investment officer of fundamental fixed income and co-head of Americas fixed income at BlackRock. "If growth continues to deteriorate in the euro zone, due in large measure to weak private-sector lending from a deleveraging banking sector, we would further reduce our positions in the euro zone, such as in Italy and Spain."
- European Regulators to Charge Banks Over Derivatives. European antitrust authorities are moving soon to bring a case against some of the world's largest banks alleging collusion in the $27 trillion dollar market for credit derivatives, people familiar with the investigation said. The probe by the European Commission involves 16 financial groups. It focuses on whether they sought to stifle competition from exchanges in the market for credit-default swaps, which pay out when a country or a company defaults on its debts. If the European regulators press ahead with their administrative case and win, some or all of the banks could face fines.
- Euro's Bears Go Back On Prowl. Investors are turning against the euro—again. Some say the common currency is due for a correction in light of the latest round of flare-ups in the euro zone, including Sunday's last-minute deal to save Cyprus' banking sector and Italy's political stalemate following elections last month. These euro bears predict the currency will head to $1.20 or lower if a fresh crisis causes investors to dump European assets. The European Central Bank also could buy sovereign bonds to calm markets, which would weaken the euro because it would involve printing money.
- Big Players Cash Out of Hong Kong Property. With the government growing confident that it has halted the meteoric rise in property prices, some of this city's biggest real-estate investors are getting out. Several of Hong Kong's wealthiest families are planning initial public offerings of hotels, offices and other real-estate assets in coming months, while others are lowering prices on luxury apartments to entice buyers.
- Sebelius: Some Could See Insurance Premiums Rise. Some people purchasing new insurance policies for themselves this fall could see premiums rise because of requirements in the health-care law, Health and Human Services Secretary Kathleen Sebelius told reporters Tuesday. Ms. Sebelius’s remarks come weeks before insurers are expected to begin releasing rates for plans that start on Jan. 1, 2014, when key provisions of the health law kick in.
- What to Cut: Excess federal property costing taxpayers billions. The federal government owns or leases between 55,000 and 77,000 vacant properties. But it's impossible to tell exactly how many. No precise inventory has been kept. Selling them off, though, could save taxpayers between $3 billion and $8 billion a year, according to various analysts. That's nothing to scoff at as the government grapples with a mounting debt and sequester-tied spending cuts.
- GOP leaders voice 'grave misgivings' to Obama over key terror trial in civilian court. The Republican chairmen of four congressional committees, with oversight for intelligence, the armed services, the judiciary and foreign affairs, have told President Obama they have "grave misgivings" about his administration's decision to send Usama bin Laden's brother-in-law to a federal court for criminal prosecution. The lawmakers voiced their concerns to Obama in a letter obtained by Fox News.
- Fed Study Says China's Growth Could Slow Sharply by 2030. Economic growth in China faces mounting headwinds and could fade dramatically in the years ahead due to declining productivity and an aging population, according to a U.S. Federal Reserve study. Trend growth could slow gradually to around 6.5 percent by 2030, or it could break much more sharply to a pace under 1 percent if forces undermining economic activity combine in a "worst-case scenario," according to the study, which was published online on Monday.
- Cyprus Readies Capital Controls to Avert Bank Run. Cyprus is expected to complete capital control measures on Wednesday to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders. With banks due to reopen on Thursday, Finance Minister Michael Sarris said he expected the control measures to be ready by noon (1000 GMT) on Wednesday: "I think they will be within the realms of reason," he said, without going into details.
Business Insider:
USA Today:
- Study: Health overhaul to raise claims cost 32%. Medical claims costs — the biggest driver of health insurance premiums — will jump an average 32% for Americans' individual policies under the Affordable Care Act health care law, according to a study out Tuesday by the nation's leading group of financial risk analysts.
- UK banks braced for details of capital shortfall. Britain's banks discover on Wednesday how much extra capital they need to keep regulators happy when the outcome of an inquiry into their financial health is revealed. The Bank of England will release the capital requirements on Wednesday morning.
- The Debt Run. INFLATE, stagnate, default. That has been the choice facing highly indebted economies ever since the crisis broke in 2007-2008. It would be nice if growth could lift us out of this mess, but that looks unlikely; see how sluggish growth has become (the 2000 decade ended in 2009, before the Greek crisis hit, so this is not just an issue of austerity). Why is this? There has been too much focus on government debt; the problem is total debt in an economy, including the financial sector, corporates and consumers. Government debt usually rises sharply when another sector is badly hit; Cypriot government debt, for example, was only 61% of GDP in 2010. Think of debt as a claim on wealth. If a bank extends you a loan, you now have wealth in the form of money that you can spend on goods and services or use to buy an asset, such as a house; the bank also has an asset in the form of its loan, which it records on its balance sheet. Debt can thus increase rapidly relative to GDP and can help increase output, as the debtors spend their wealth. All is well as long as the creditor is confident that the debtor can repay the debt. We are nearly six years into this crisis and we have made precious little progress in running down debts and thus are vulnerable to further crises; Cyprus is just the latest example. Nor have we decided whether default or inflation is the preferred option. Either way, savers should beware.
- Global pool of triple A status shrinks 60%. The expulsion of the US, the UK and France from the “nine-As” club has led to the contraction in the stock of government bonds deemed the safest by Fitch, Moody’s and Standard & Poor’s, from almost $11tn at the start of 2007 to just $4tn now, according to Financial Times analysis.
- Guangzhou to Levy 20% Tax on 2nd-Hand Home Sales. City plans to impose 5 measures to control housing prices with "perseverance", citing Deputy Mayor Chen Rugui. A 20% capital-gains tax on homes "will have a tremendous impact" on speculative buying, Chen said.
- China's southern city of Guangzhou plans to limit home price increases under the level of this year's local GDP and income growth, citing Deputy Mayor Chen Rugui.
RBC:
- Rated (WDC) Outperform, target $55.
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 118.50 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 94.25 +3.0 basis points.
- FTSE-100 futures +.13%.
- S&P 500 futures +.01%.
- NASDAQ 100 futures +.06%.
Earnings of Note
Company/Estimate
- (LNN)/1.29
- (PAYX)/.39
- (PRGS)/.25
- (PVH)/1.50
- (SCS)/.19
- (RHT)/.30
- (TXI)/-.41
- (FUL)/.50
10:00 am EST
- Pending Home Sales for February are estimated to fall -.3% versus a +4.5% gain in January.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,325,000 barrels versus a -1,314,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,000,0000 barrels versus a -1,476,000 barrel decline the prior week. Distillate supplies are estimated to fall by -850,000 barrels versus a -672,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by +.45% versus a +2.5% gain the prior week.
- None of note
- The Fed's Kocherlakota speaking, Fed's Rosengren speaking, Fed's Evans speaking, Fed's Pianalto speaking, Eurozone Industrial Production data, France/UK GDP reports, Italy 10Y Bond auction, Eurozone Trade Data/Consumer Confidence, 5Y T-Note auction, weekly MBA mortgage applications report and the (Z) analyst day could also impact trading today.
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